Dairy drives first July trade surplus in 20 years

New Zealand reported its first trade surplus for the month of July in two decades on global demand for dairy products.
File photo

New Zealand reported its first trade surplus for the month of July in two decades as global demand for dairy products stoked the nation's export receipts.

The value of exports outstripped imports by $129 million last month, beating a Reuters survey predicting a deficit of $150 million, and taking the annual surplus to $1.31 billion, according to Statistics New Zealand.

"This is the first July surplus since 1991," overseas trade manager Stuart Jones said in a statement. "It compares with an average July deficit of 18 per cent of exports over the previous five years."

Merchandise exports rose 4.7 per cent to $3.72 billion compared to July 2010 on the back of higher receipts for dairy and greater volumes sold offshore.

The value of imported goods fell 4% to $3.59 billion, falling short of the predicted $3.95 billion.

That comes in the face of a strong New Zealand dollar, which erodes exporters' returns and touched fresh post-float highs last month. The trade-weighted index of major trading partners' currencies rose 3.4 per cent in July, and was 8.2 per cent higher compared to the same month a year ago.

Local producers have helped underpin New Zealand's economic recovery, with recent data showing the economy growing faster than expected, and the Reserve Bank is counting on primary producers to start spending once they've paid back large debts accrued during the boom of the past decade.

Export receipts for milk powder, butter and cheese rose 9.8 per cent last month to $808 million, and have grown 26 per cent to $11.41 billion in the past 12 months.

The volume of milk powder, butter and cheese exports rose 8 per cent to 189,000 tonnes compared to July 2010. Casein and caseinates fell 3.1 per cent to $58 million in July, and are up an annual 13 per cent to $723 million.

That comes during New Zealand's off-season when Northern Hemisphere production is near its peak, and dairy prices fell 0.9 per cent to a trade-weighted US$3,660 per metric tonne in the latest globalDairyTrade auction, Fonterra Cooperative Group's online trading platform.

Crude oil exports rose 22 per cent to $212 million in July, and have dropped an annual 3.2 per cent to $2.04 billion.

New Zealand's annual merchandise exports have gained almost 13 per cent over the past 12 months to $46.24 billion.

Australian export receipts rose 8.5 per cent last month to $897 million on more crude oil and refrigeration equipment, while Chinese export sales increased 3.6% to $387 million. Indian exports more than doubled to $112 million in July.

The value of petroleum imports fell 14 per cent to $585 million in July, and has increased 8.2% to an annual $7.14 billion.

Machinery and equipment imports rose 1.5 per cent to $463 million last month compared to July 2010, and have increased 14 per cent to annual $5.49 billion.

That led a $100 million increase in July imports of capital goods, which was largely made up of portable computers and electrical transformers.